The Week That Was

420
Sat, Sep 15, 2012 - 12:03pm

I tried to warn you that this week was going to be wild. I expected the pressure and intensity to ramp up with each successive day and it most certainly did. By Friday, everyone was ready for the weekend. That's fine but, come Monday, you'd better be ready.

What a fantastic week we had. Made even more special by the fact that we were set up for a disaster. Recall that I had been warning you for about 10 days that a Cartel Raid seemed on the horizon. They looked like they were once again setting everyone up for a massive beatdown. By the looks of the CoT yesterday, I was exactly right.

The situation, as it turned out, was eerily similar. Let's take a look:

December 2011: The price of gold bottomed late in December 2011 at $1525. The CoT also "bottomed" at a total gross Cartel short position of 325,960 and a net short ratio (gross shorts divided by gross longs) of 1.98:1. The price of silver bottomed at $26.40. The silver CoT bottomed with 55,356 gross shorts and a net short ratio of 1.34:1.

Jan-Feb 2012: The metals then took off on a two month rally, peaking on Tuesday, February 28. Gold reached $1790 (+17%) and silver made it to $37.50 (+34%). The CoT taken that afternoon showed a complete reversal from December. Now the total gross short position in gold was 390,412 with a net short ratio of 2.69:1. The total gross short position in silver had reached 78,395 and a net short ratio of 2.32:1.

And what happened the next day, 2/29/12? Using The Bernank's Capitol Hill testimony as cover, the bid side of the metals was overwhelmed by Cartel manipulation and a 3-month, short-covering beatdown ensued. https://www.tfmetalsreport.com/blog/3465/csi-comex-gold-and-silver-massacre

Gold bottomed again almost exactly three months later on Wednesday, May 30, 2012 at $1537. Two days later, the employment report for May was released and QE has been on everyone's lips since. On Tuesday, May 29, the CoT once again looked like this:

May 2012: On 5/29/12, the total gross short position of The Gold Cartel stood at 300,917 and the net short ratio had fallen all the way to 1.77:1. In silver, the gross short position was back to 60,151 and the net short ratio had fallen back to 1.31:1.

It had all been a set-up. From the lows in December, spec money flowed into the metals and The Cartels welcomed every dollar. At the peak, The Bernank was rolled out in front of the cameras to put off QE and The Cartels attacked. Over the next 90 days, they covered all of their fresh shorts and then waited all summer to play the game again.

August-September 2011: The final bottom for gold occurred on June 28 at $1552 and silver reached $26.21. The CoT on June 26 was once again at a "bottom", too. On Tuesday, July 10, the total gross short position of The Gold Cartel was 316,165 and the net short ratio was 1.93:1. The total gross silver short position was 62,478 and the ratio was 1.29:1.

As of this past Tuesday, September 11, look how things had changed again. Prices had risen considerably. Gold closed on Tuesday at $1735 (+12%) and silver closed at $33.56 (+28%). The total Gold Cartel gross short position was once again 380,239 and the net short ratio was 2.66:1. The total Cartel gross silver short position was 79,478 and the net short ratio was 2.47:1.

The Cartels had set us up again. The point is this: If the Fed had "disappointed, if The Bernank had put off all new QE until after the election, there can be zero doubt that we would have, once again, seen a massive, manipulative raid on gold and silver.

In hindsight, do you recall the very sharp and brief spike down that occurred about 10 minutes before the Fedlines were released on Thursday? This was almost certainly someone or something with foreknowledge of the raid, attempting to front-run The Cartels. By now, we all know what happened, instead. Rather than being "saved" by The Bernank and using "no QE" as cover to screw everyone once more, QE~ was announced and now The Cartels are trapped!

We'll use the days ahead to go into greater detail on the implications of this but rest assured for today that sharply higher prices are coming. QE~ only serves to increase the global demand for physical metal. This demand will underpin any attempts by The Cartels to start a selloff. Over time, they will be forced to cover at an accelerating pace, similar to April 2011 in silver and August 2011 in gold. There will be panics and you can count on every dirty trick imaginable being thrown at the "markets". This time, however, it's not going to work. With QE~ as a backdrop, every dip will be bought, each successive low will be higher. The overconfident and greedy fools could/should have used this time to draw flat and perhaps even go net long. Instead they arrogantly chose to play their games one more time. This time, however, they will lose. The game is over and the fireworks have begun, even if the players seemingly haven't yet heard the final whistle.

Only one reading assignment this weekend and it's this piece from Brandon Smith at Alt-Market. This is one that you need to read carefully and then print it off and keep for posterity.

https://www.alt-market.com/articles/1034-get-ready-for-an-epic-fiat-currency-avalanche

Lastly, once again I beg everyone to recognize that this main thread is for the discussion of precious metals and issues affecting such. It is OK to reference events in the MENA as the current situation there clearly has an impact on the global economy, the price of oil and the equity markets. It is not OK to get into pissing matches regarding "radical Islam", "Zionism", "American Imperialism" and the like. There are forums for that and I've even gone to the trouble of setting one up for you: https://www.tfmetalsreport.com/forum/4188/radical-islam. Going forward, I am simply going to delete and remove comments from this main thread that I feel are set to hijack the discussion and turn people away from the education that this site provides. No exceptions. Got it?

OK, with that, I wish everyone a fantastic and restful weekend. Come back on Monday prepared for another wild and crazy week.

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  420 Comments

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gdog
Sep 16, 2012 - 4:47pm

Reggie Middleton speaks on QE3 & discrepencies in the data...

Reggie Middleton REALity TV #1: Benjamin Bernanke LIED To The World About QE3/Unemployment

Supporting charts & data here:

https://www.zerohedge.com/contributed/2012-09-16/i-go-ny-fed-illustrate-lies-perpetrated-fed-chairman-himself

criscrossingGreen Lantern
Sep 16, 2012 - 4:46pm

@Green Lantern

Thank you for the information about CAF.......listening to her experiences at HUD was 'a turn on the light moment' for me and has started me on the path to connecting the dots in this very confusing world. I hate to think of myself as being naive, but I was raised as a country girl with those same values, I.e., hard work pays off, honesty, a love of family and relationships, etc. Everything she states is ringing true to me.......I just hate to admit that our world is so f###ed up. I wish it weren't so.

Glad for your efforts to illuminate here @Turdville!!!! You are absolutely right about Turd enlisting her for a podcast!!!! I'll second that motion!

Mariposa de Oro
Sep 16, 2012 - 4:45pm

Don't forget La Raza

My mother was born in Peru and came to the US as a teen back in 1947. She LOVES America and what it stood for. She speaks fluent Spanish and is involved in the anti-ILLEGAL immigrant movement. She still lives in SoCal and thus has a front row seat, so to speak. She is in her early 80s and has been threatened by La Raza for her activities. She has told me that La Raza is planning on a violent overthrow of the southwestern US. She and I believe they will take advantage of dollar death/economic collapse to do this. Look into the Reconquista movement. I think that's the bigger threat, jmo. I wish my familiy would get out of there but there refuse to. My mom could blend in but my dad, sisters and cousins could not. I fear for their safety and lives.

Louie
Sep 16, 2012 - 4:45pm

MBS market- QE3 effect

How much of an effect do you think the Feds purchase of $40b/month in MBS is going to have on the MBS market. If I figure correctly, $40b/month is about 1/2% of the total market each month. If they but for 10 months, they will have taken 5% of the securities off the market. Any effect on the prices? Thoughts? Opportunities?

I am thinking of buying up a bunch of mortgages on Detroit proprieties on the cheap, bundling them into a security, then selling them to Bernanke at face. Send 5% to each political party so that I never go to jail.

Tired of waiting for PMs to pay for my own private island.

Short Stack
Sep 16, 2012 - 4:39pm

@Short Stack

"Again, not trying to preach at you. Not trying to start an argument. Just pointing out some inconsistencies in your statement."

I appreciate where you are coming from. I know the drill. I was a very committed Christian for a long time. I'm quite aware that my characterization was superficial. I was taking a stab at US foreign policy, not Christianity. It is the US government that seems to think feeling contrite is enough because you and I both know there will be no repentance as a result of this particular action. They are going to keep right on killing women and children as long as, in the words of Madeleine Albright, the cost is worth it. The words "Bless them that curse you, and pray for them which despitefully use you" might as well be backwards masked Chinese to the Republicans and Democrats who serve mammon rather than God.

During the 2007 Values Voter Summit, sponsored by the Family Research Council, Dr. Paul’s closing peroration focused on the Christian Just War Doctrine and the evils of perpetual war. His invocations of the Prince of Peace provoked a chorus of boos that began even before he was finished speaking.

I remember that, do you?

I was at this year's Values Voters Summit yesterday. They are still screaming for blood.

Even though I no longer call myself a Christian "I belong to a Kingdom of Peace, where only love is the law..."

"I Don't Belong (A Sojourner's Song)" By Buddy Greene
tyberious
Sep 16, 2012 - 4:30pm

LOL

Not the last time I checked!

Hillsie
Sep 16, 2012 - 4:24pm

TURD, thoughts?

I was reading the comments section of Zero Hedge....like you do and came across an interesting proposition that deserves some discussion in the current climate.

As China have managed to keep their currency cheap for the last decade and have thus creating a vast balance of payments surplus that has been converted into over 1 Trillion in US Treasuries, this has been quite a boon for China enabling them to create manufacturing and industrial Jobs in China at the detriment of the USA.

Now take these treasuries which the US believes is leverage on China, for they would never dare to sell them as this would devalue the investment that they had worked so hard to achieve. This is true, if China decided to dump their holdings then they would get back much less than what they payed for them and thus be the loser. I guess this is the symbiotic relationship that the US has with China, they believe that if they pay them in IOU's then they are in the driving seat as to how and when they spend that money....

But imagine for a moment that china see the system for what it is and realize they cannot sell their US holdings for fear of wiping out their entire foreign reserves, although they may at the same time crash the treasuries market if Big Ben cannot absorb the selling. What if then they decide to use the system to their advantage?...... US treasuries are tier one capital and can be pledged for bank loans at face value......

What if China have turned the tables on the US?, what if they have taken their Treasuries and pledged them as tier one capital with western banks for an equivalent cash liquid value? They would then be in the enviable position of transferring their sovereign risk to the western banks eager for good collateral, whilst at the same time taking the loan money to buy gold, silver and tangible assets worldwide.

This could be the greatest move of all time by China, move an entire manufacturing base to their shores, build up a huge dollar reserve in treasuries, swap this reserve back to the US for loans soon to be defaulted on and buy with the cash tangible assets.....

The pledged collateral will stay on the books of the banks that lent the liquid cash at 1:1 china walk away with real assets, the banks are left with ever depreciating US paper....Genius.

Kcap
Sep 16, 2012 - 4:22pm

@tyberious

Are you a female?

If not, why on Earth would you think calling the silver circus a "circus" is degrading? I can't make a reference to a center of theatrical craziness known as a circus? Do YOU think the silver "scene" is sane? Or normal? The whole thing couldn't be better described than a circus in my opinion.

Lighten up. Everyone (at least I think they are) is on the same side here.

Kcap

SIlverbee
Sep 16, 2012 - 4:08pm

Joining the dots

One of the reasons why Benny may have been apprehensive in the past about QE would have been oil prices. Qeinity would obviously keep pushing the oil price up. However, he may have changed his mind at the last minute hence the EE being caught out as he may have got the nod about the up and coming Israel/Iran `shock and awe' and thought sod i,t the oil price is going to the moon anyway what difference does a little Qeinity make?

Caradoc
Sep 16, 2012 - 4:04pm

Silver in new time travel movie

Newest Bruce Willis film ("Loopers" about time-traveling assassins from 2030 or so) will be out soon. The trailer video linked below is mostly action, doesn't mention silver. But if you click on the "explore" icons at top of the video, some of them indicate that in this version of the future, gold is highly respected and silver is the accepted medium of exchange.

https://loopermovie.com/videoplus/

Interesting to see the value of precious metals being introduced to the masses....

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Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
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4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
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Key Economic Events Week of 4/20

4/20 8:30 ET Chicago Fed
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